Why cUK wont be paying iScot pensions

And we're back! Yes it's yet another pension blog. 

I'm sorry but I really don't have any choice because the level of understanding on the topic is just horrific. It's bad enough MPs spouting nonsense but the feedback I'm getting from so many people just shows that I need to go back to basics on a few issues. 

I'm grateful to some friends and former workmates on Twitter and Scotland in Union for their feedback which has helped me to create this blog.  

Don't worry I'm not going to set out this blog as a pensions seminar, instead I'm going to take Philippa Whitford's assertion of pension policy at face value and show why it just doesn't work.  

I'm fully aware that whatever I write here isn't going to be comfortable for nationalists to hear, it's also not going to sound as neat and tidy as the lies they've been told about pensions. I also understand that, when you spent the independence campaign claiming it was Better Together that misled people on this subject, it's very difficult to admit the truth but sometimes the truth just isn't neat and tidy or easy. 

The Janet & John bit

Given that this post will get a little complicated I thought it best to start with as simple a summary as I can. 

In all of the following cUK refers to the continuing UK state, that is the state that exists after Scottish Independence. Where I use rUK that is referring to the UK excluding Scotland but before independence. Those are quite important distinctions given what follows. iScotland refers to an independence Scotland after the breakup of the UK. 

There are two models under discussion for pensions. 

1 - The Scots for Scots model which both the UK and Scottish Government agree on. This has Scots paying for all Scottish pensions (including those currently in payment) and cUK paying for cUK pensions. 

2 - The Whitford model which says that cUK will pay for existing Scots pensioners after independence. 

I'll argue below that the asymmetric Whitford model doesn't work and would collapse into option 1 even if it was agreed. 

Moreover if there is an obligation on cUK to pay Scottish pensioners after independence then there is an equal obligation on Scotland to pay a population share of cUK pensions. Scotland is part of the UK right now and pensions obligations have been built up under Scotland's membership of the UK. 

If the UK were to split into cUK and iScotland then iScotland would still be due to meet its obligations run up under the UK pension system and this would be split on a population share basis of all obligations. 

When you add all of this up, cUK paying for iScottish pensions minus iScottish contributions for all UK pensions, it works out against Scottish interests to agree to the Whitford model.

Let me emphasise that the key to all of this is that the cUK pension system is not the former UK pension system. This isn't a matter of pedantry but a fundamental misunderstanding on the part of nationalists such as Whitford. A simple pause for thought would illustrate this point but as usual nationalism is distracting from objectivity.  

This post explains it all in detail, with some helpful diagrams. 

The UK Pension Policy
Whitford's model takes its justification from Scottish National Insurance (NI) payers having paid into the UK system are due a pension from cUK, it is therefore not the Scottish Government's obligation to provide that pension. 

I've demonstrated here why that is nonsense, but let's walk it through.

SPOILER ALERT it's the use of the letter "c" in the above statement that trips her up. 
Our nice friendly graphic illustrates the model we're using. There are 11 people, 10 in rUK and 1 in Scotland (that is very roughly our population split). All 11 are part of the UK, all paying NI and all contributing into the UK pension system. Now we all know that those payments are going straight out of that blue box and paying for pensioners (who are in roughly the same proportion to these workers in each nation, although we'll stick a pin in that for now). 

These payments into the system are creating non legal obligations on the UK government to provide a pension for these payers in the future. 

So you pay NI in now, you get a pension in the future. So far so normal (hopefully).

Now we are going to travel forward in time (and the UK has remained as a single state), all our workers have now become pensioners. 



Our pensioners are all receiving their pension from the UK system (the workers of the future are paying in and supporting our pensioners). This is what we have right now and what we would expect from a normal state pension system funded on a pay as you go system. 


The Whitford Pension Policy
So what is the Whitford model of independence for pensions?



Now with Scotland an independent country its pensioners (according to this model) are still paid out of the cUK Pension System. So cUK's ten workers are supporting 11 pensioners (one from Scotland and ten from cUK). The Scottish worker on the other hand is paying into the newly set up Scottish Pension system. Of course this new Pension system has no pensioners to support at present so it's a bonus for the Scottish Government, lots of NI coming in and no pensioners to support at the start. 

It's an attractive prospect, no wonder nationalists such as Campbell (from Wings Over Scotland) was so mesmerised by it that it based the Wee Blue Book on it, and consequently ruined any credibly it could have.

Also no wonder so many nationalists want to believe this model, they let all objectivity leave them and believe that this is a credible alternative and that the cUK electorate would remotely put up with it. 

But let's leave the political logic aside and actually apply simple logic to the model.

If you step away from the flag, and the emotion of nationalism, and just look at the model, you can see the flaw in it. Try to take a moment to see if you can spot it (honestly it will be worth it for you to work it out yourself). 

The flaw
The flaw is simple. The cUK Pension system is, like the Scottish Pension system, a new pension system. It's easy to miss, after all cUK and UK are very similar and I deliberately made the boxes the same colour but they are not the same system (I told you it was the "c" that was the problem). 

Therefore we actually have something much more complex in play now. 

Not only do we have two new (and separate) Scottish and cUK pension systems but we also have the legacy UK pension system which has obligations to pensioners in both countries (this is known in the pensions industry as a run off scheme).  

It is this legacy UK Pension system that today's pensioners have built their "rights" in and that is the system they will be getting paid from (again if this looks bonkers to you remember this is Whitford's model)


So today's pensioners in cUK and Scotland are still getting paid from the UK pension system. 

But those obligations were built up by the cUK and Scotland so they need to be supported by both states on a population share basis. So cUK current taxpayers need to pay in to support all former UK pensioners (10 in cUK and 1 in Scotland) but Scottish taxpayers also have to pay into that system, on a population share basis. 

Scottish taxpayers therefore need to pay into the "former" UK Pension system paying for 1/11th of all the recipients. 

This may strike some nationalists as bizarre. However it's only bizarre due to the nature of nationalism. 

The obligations were built up under the UK (of which Scotland was a part) they therefore have to be paid out by the parties that were that state. Scotland is not in an exceptional position here nor could it expect to waive its financial obligations under Whitford's model unless we were talking about Scottish exceptionalism.  

If Scotland refused to pay into the UK Pension system then the cUK would also stop paying in, the legacy UK pension system collapses and stops paying pensions. Overnight the cUK Pension system and the Scottish Pension system would have to take over those obligations. 

Let's be clear here. We are not talking about sovereign debt (I cover that here) we're talking about a highly complex and over engineered political system that would have to rely on a huge amount of consent from both sides if it was to operate.  

There is no ability for Scotland to walk away from its obligations. Refusing to pay into the system would just result in Scottish pensioners having their UK pension stopped and we would end up with Scottish pensioners supported by Scottish workers and cUK pensioners supported by cUK workers. 

Or to illustrate that graphically.

 

Haven't I seen this before?
Now hopefully that graphic above does look a little familiar to you. That's because that is the pension system as proposed by the Scottish Government and Westminster. It's the model that both sides agree on, and for very good reasons. 

Firstly it is much cleaner and creates largely the same net economic outcome (more on that later if you can bear it). Now Scottish workers are just paying for Scottish pensioners rather than 1/11th of all former UK pensioners. Similarly cUK taxpayers are just taking care of cUK taxpayers rather than 10/11th of former UK pensioners. 

Secondly the system allows for two very different pension systems to evolve - as the SNP planned in their own pension paper. This is often overlooked by those seeking to claim that cUK would pay for Scottish Pensions. Under the Whitford model if the two systems did diverge then we could end up with a highly complex set of pension payments where the former UK pension system paid one part of pensions whilst the Scottish/cUK Government topped it up (or conceivably took it down) to adapt to their domestic pension policy. It would be beyond a nightmare to administer across two separate state systems. 

Thirdly it allows for payments in different currencies, something that the former UK system would not be able to cope with under the Whitford structure. If Scotland created its own Scots Pound then under the Whitford model pensioners would be paid in GBP whilst their costs would be in Scots£. That makes no sense and creates a chaotic welfare policy. 

Therefore it's really simple. This Scots for Scots model was selected by both sides over the Whitford model because its not only the only one that works, it's the only one that fits a model of independence. 

Compensation, don't go there
I know that some nationalists are really going to struggle to accept the fact that it was the Yes side that lied with regard to pensions during the independence campaign - despite the SNP's official position on pensions. They are going to be looking for a way out of this. 

I suspect that may fall on a lump sum payment (another of Whitford's suggestions). That works on the basis that the model of separate systems apply but the cUK Government will be forced (somehow) to pay a lump sum to Scotland in respect of its past contributions to the system.

However let's just think it through with the same logic as above. If there is a case for cUK to make a payment to Scotland in respect of the past pension contributions, then Scotland (as a former part of the UK) is equally due a payment to cUK: a population share the past pension contributions. 

When you add both of those together they would broadly balance out with one another. If I were a nationalist I would stop right there because the more you look into the data the worse it gets for Scotland (you might want to skip this next bit). 

Remember the pin from earlier? 

Scotland contributes less in NI than its 8.3% population justifies on a UK basis as the GERS methodology shows.

So Scotland is paying into the pensioner pool less that cUK but taking the same out.

"in mid-2012,there were 32 working-age people supporting every ten pensioners in both Scotland and the UK."

Yes it is true that Scottish pensioners have shorter lives than those in rUK but because there are proportionately more pensioners in Scotland the ratio is maintained. 

So in terms of the current system Scotland pays in less but takes out the same (proportionally) than rUK. That would mean in the event of separation and a set of compensation payments cUK would be paying less to Scotland than Scotland would be paying to cUK. On a net basis we'd be out of pocket. 

That's the fourth reason why the SNP are so keen on a clean break pension settlement, if only Philippa Whitford had thought it through. 

Pensions: just accept the inevitable
At some point the nationalist movement is going to have to face reality when it comes to pensions. 

They lied to pensioners during the independence referendum and they are still doing it now. 

Their alternative models make no sense at all unless your belief is that Scotland is exceptional and entitled to receive payment from a system designed to support all of the UK but isn't expected to contribute to the financial obligations of that system. 

Furthermore it leaves no room for a distinct Scottish system or currency, they cause administrative chaos, inevitably leading to the collapse into the very model proposed by the SNP and the UK. 

Finally the separate pension model is marginally financial beneficial to Scotland and therefore it's one that the nationalist movement should quietly accept and hope no one wants to look too deeply into. 

Pensions in an independent Scotland will be paid by the Scottish Government from Scottish taxation with no transfer of assets from the rest of the UK. If you want to make a case for independence then at least have the guts to base it on Scotland standing on its own two feet. 

This issue can of course  all be resolved by the SNP leadership. They have MPs (such as Whitford) not so quietly going rogue contradicting their policy on pensions (and others on GERS) and yet they are allowing it to happen. 

As Fraser Whyte points out for a party that prides itself in discipline this can only be the result of an explicit strategy by the SNP. Whilst the leadership recognise their stated policy they turn a blind eye to their MPs contradicting it as it helps stoke the fire of their strongest supporters letting them carry on thinking that their simple solutions are indeed the answer. 

Until they come to reality. I'll be here, writing blogs band banging my head on the keyboard in frustration. 

Has the SNP just changed its pension policy?

I've blogged on pensions time and time again, but in all cases when it came to dealing with the SNP and pensions it was dog whistle politics, innuendo or sleight of hand. After all it would be difficult to pin anyone in the SNP actually saying that the UK would fund Scottish pensions in the event of independence. Sure there was a lot of pointing to a letter that turned out to be wrong and a casual nod towards Steve Webb's evidence to the Scottish Affairs Select Committee all designed to give the impression that the UK might fund pensions without actually saying it. 

The SNP are clever that way. There is a reason they were never explicit of course. The continuing UK wouldn't fund pensions in an independent Scotland. Both sides agreed on this.

Let me say that again.

Both sides agreed on this. The SNP's own paper on pensions and their white paper were explicit on it. Therefore for the SNP to state that cUK would be funding pensions for Scots would be a huge issue and a remarkable change in policy with huge repercussions.

Enter Dr Whitford
That all changed today when Dr Phillipa Whitford wrote to a constituent (Martin McFarlane) on the subject. In his letter he challenged Whitford's recent use of the zombie DWP letter and provided her with an extract from the White Paper which stated that the Scottish Government was responsible for all pensions of those living in Scotland and my FOI letter.

Rather than give the innuendo and dog whistle approach, a potentially cornered Whitford came out with what can only charitably be described as a rewriting of history or possibly a dramatic change in SNP policy. Below I quote the letter my own commentary on it. "The UK Pensions Minister Steven Webb was quite open when giving evidence to the Work and Pensions Committee" Not a good start it's Steve Webb and it was to the Scottish Affairs Select Committee - none of this is that important but it does show that this was not a well thought through reply. "... that the UK would have to fund pensions of those already retired and with accumulated pensions rights after paying in National Insurance over many years." Steve Webb said exactly the opposite if this. Time after Time at the committee it was clarified that Webb was not talking about the funding of pensions. The very article that Whitford cites in her reply also highlights that the question of payment (that is funding of pensions) was not resolved at the committee ("The question is, who is paying for it, and how is that [cost] split?")

So the idea that the UK stated that it would be paying and funding Scots pensions is a complete fabrication by Whitford.
It get's worse. In Webb's follow up written evidence he was explicit that cUK would expect an independent Scottish Government to fund Scots pensions including those already in payment. This isn't Whitford making a casual mistake, she is explicitly stating something that was not said in the committee and was explicitly contradicted by Webb himself.
"This is normal practice and there are many mobile workers who have proportions of their Pensions from more than one country. As, he pointed out, where you live or what citizenship you hold is not relevant, just as or those pensioners who currently live in France or Spain." What normal practice is there for pension liability allocation on the secession of a state? The only case we have is the UK and Eire splitting up and there Eire took on the liability for existing pensions.

Whitford is attempting to deliberately confuse the issue of people moving country after retirement and the break up of a state. Let's be clear here, the "normal practice" in these circumstances as set out by Whitford's own party in their "White Paper' and 'Pensions In an Independent Scotland" publications was that the responsibility for all pensions (including those currently in payment) for all Scottish residents at the point of independence would fall on the Scottish Government and not the continuing UK.

So not only do we have Whitford making up what the UK government said we also have her explicitly contradicting her own party's proposals on the subject. Something she was explicitly aware of when replying as Martin McFarlane provided her with an extract of the SNP. So the real question here is do we have a new pension policy? "Going forward, of course, a growing proportion of each younger person's pension would be paid to and due from a future Scottish Government" This gives us no doubt about Whitford's intentions and meaning here. Her case is that an independent Scotland would only be responsible for new pensions rights accrued from the date of independence with existing rights paid for by the continuing UK. Again both the SNP and the UK agreed explicitly that this was not the case. Whitford is therefore asserting a set of facts that do not exist or creating a new SNP policy. "It was proposed that there would likely come a cut off point from where, the UK would transfer a negotiated sum to cover their liability and the pensions would then become the responsibility of the Scottish Government" Now this is interesting because it's entirely new.

What exactly was proposed?

When was this proposed?

The SNP never proposed it in any official publication that I'm aware of (and I've been through them over and over again). So do we have a senior frontbench SNP MP making up a proposal that did not exist? Furthermore what negotiated sum would there be for a liability that has no backing assets. Pensions are a transfer payment, they are paid for out of current taxation and not from a pot. Again, let me be clear here, (and I make no apology for repetition) Whitford is contradicting existing SNP policy or announcing a new policy. "All of that transition would be negotiated but it is misleading to suggest that the UK would or could walk away from their liability for Pension for which they have received a citizen's National Insurance contributions for 30-40 years." It's a mark of how much Whitford is winging it here that she now contradicts herself. At the start of the letter she recognised that citizenship is irrelevant, now she invokes citizenship incorrectly. The continuing UK would not be walking away from a liability, the liability (for current and future pensions) would fall with the Scottish Government for all Scottish residents as the SNP proposed and as agreed by Steve Webb in his written evidence. There is no legal entitlement to a pension from the UK state as has been demonstrated within the European Court. It's quite clear the only person being misleading here is Whitford. "All of these issues are being considered by the Growth Commission and will again be aired in any future debate. However there are international norms and it would be very unlikely that the UK would default on paying the pension entitlements to people (sic) have paid their National Insurance contributions" All fascinating stuff.

Is this now a statement that the Growth Commission have abandoned the SNP's previous position on pensions and are saying that pensions will be paid by the continuing UK?

If they do that will be a remarkable state of affairs and will leave many Scottish pensioners worried about their existing pensions, because with the UK on the record as stating existing pensions will depend on the ability of the Scottish Government to fund its obligations it would mean their pensions would stop on independence. There are no international norms when it comes to allocating pensions between states (other than Eire). Furthermore the UK government agreeing with the Scottish Government position that they take on the liability for all current and future Scottish pensions is not a default (again something that has been established in law). Therefore this letter begs a number of questions: Is this a new SNP policy on pensions from a senior SNP front bencher? Is the Growth Commission standing behind the policy as set out in this letter? Why has Whiteford specifically mislead Mr McFarlane by stating facts which did not exist with respect to Steve Webb's evidence? Is Whiteford badly misinformed, lying or setting out a new policy on pensions? If the SNP has changed its position on pensions should Scottish pensioners now be worried about their state pension after independence?

Why you can't remotely rely on Richard Murphy

Richard Murphy had a bad introduction to Scottish politics. He blundered into GERS in a blog and Twitter and rapidly had to backtrack on his assertions about it. Since then he's been on a mission to dig himself out of the hole, that rarely works in my experience. 

His latest attempt was an article in the National, and if it was an attempt to leap out of the hole then he's currently lying in a heap at the bottom nursing a sore ankle.

If you have arrived here it may well be because you have decided to cite this article by Murphy as a counter-point to GERS. I'm sorry but you are going to be disappointed.

To be valid a counter-point in a debate needs to say something of substance, as you'll soon see the article doesn't actually do that and in fact ties itself up in knots.  

Let me put it this way if you were looking to cite Richard Murphy and his National article you have just turned up to a gun fight armed with a plastic spoon.


HAD a meeting with a number of the SNP’s MPs about a year ago to discuss economics, money, tax and independence, all of which are issues to which I have given some thought. Summarising what I said is easy: that the SNP had run a great referendum campaign in 2014 barring issues relating to the currency, tax and the economy.

Humour, that's a good start.


I stand by that. And my message now is that if the Yes campaign wants to win next time, then this is where things have to change.

First, let’s start with the facts.

That would be refreshing for a change, I'm almost looking forward to this.

Or rather, let’s start with the fact there are almost no facts to discuss on the Scottish economy.

Oh dear…

As an economist, I’ll tell you that to assess Scotland’s economy you need to know about how much people have to spend in the country, how much is invested in Scotland, how much the Scottish Government spends, what the country’s exports and imports are, how much is saved, and the total tax paid in Scotland.

Agreed. All economists need data collated in a reliable way which provides a reasonable degree of confidence when it comes to these items. But I’m sure that’s what you are about to say…

Note that’s seven separate bits of data. And we only have reliable figures on some of what the government spends. 

Oh well. My hopes weren't high.

As for the rest, Revenue Scotland is still struggling to work out which people are tax resident in Scotland and it has no clue at all on what corporation tax, VAT or other taxes are due, precisely because no-one has to declare those taxes separately for Scotland.

No clue? For a article that started with “Facts” (I’m so disappointed he didn't put it in CAPS) the idea that we have “no clue” about these numbers is just plainly wrong. Absolutely GERS is an estimate but it’s an estimate with a high degree of confidence as clearly stated in the GERS methodology documentation. You have to wonder if Murphy has even bothered to read it before penning this article.

It’s the same with imports and exports: no-one knows what these are because there are no border posts at Carlisle, Berwick-on-Tweed or Stranraer. On investment and savings, we’re equally clueless.

“No one knows what they are”? Even if there were border posts in these areas we still wouldn't know all imports and exports to the level of exactitude that Murphy is demanding because a huge amount of our exports are services which wouldn't pass a border post in any meaningful sense. They would therefore have to be collated by survey. This is exactly what the Scottish Government does to collate its export data. Again it probably would have been helpful for Murphy to know that before typing. 


The message then is a simple one: when people say Scotland is in financial trouble, or running a deficit, or anything else, ask them how they know.

Because we are using data provided and calculated by the Scottish Government with a high degree of confidence.

If they say it’s the GERS (Government Expenditure and Revenue Scotland) report, tell them to read the home page for that report where it is quite candid about the fact that the data in it is estimated.

No one has ever said it wasn't estimated Richard. The idea that because something is estimated (and most government statistics are) makes it wrong is just naive. 

Economists and traders (economists backing their views with money) know this and trust this sort of methodology when it comes to statistics. For example the calculation of GDP by any statistical authority involves a level of survey and estimation. It's not like the government is counting up every penny and pence of economic activity to calculate it. Is Murphy really saying that unless we go through that process we will never know our GDP meaning any economic analysis is impossible?


It's like listening to an internet troll telling you that you cant trust opinion polls because they wont tell you the EXACT result of an election. That's all very true but they can tell us about public opinion with a high degree of confidence especially within a reasonable set of errors. 

Estimation within a confidence level is not the same as no knowledge which is what Murphy is trying to argue.  

If they retort that all financial data includes some estimates, feel free to agree, and then point out that does not usually mean that 25 of the 26 income figures in a set of accounts are estimates extrapolated from data for the UK as a whole and some consumer surveys.
Surely to make some sense Murphy would show us how those estimates are wrong, and why the published confidence levels by the Scottish Government are wrong? It’s interesting that all we've had so far is empty rhetoric with no foundation. 

And yet that is the case for GERS. Estimates may be a part of financial life but this is ridiculous: what this really says, yet again, is that there is no financial data for Scotland.

Again Estimate = no financial data. If Murphy can challenge the data why cant he show us why it’s wrong? 

For example when it comes to GERS I’ve pointed out that the levels of debt repayment are far too low and don't take account of the estimated higher level of debt servicing costs that Scotland would have on independence. That's a simple critique a set of statistics and a challenge to the assumptions. Its not difficult but it’s telling that Murphy hasn't offered one.

That leaves two questions to discuss. The first is why is this the case? Here, my answer is simple: as matter of fact what we measure is what we think is important.

He hasn't answered one question so far other than show he cant actually engage in a critique but let’s all move on.

If Scotland was, right now, to have the data it needed to manage its economy then Westminster would have to agree to its production. But the fact is that Westminster does not think it is important that Scotland has it own economic data, so it does not measure it.

Or alternatively the Scottish Government could calculate this data or obtain it directly (as it does with exports). For example we have a FOI requests which shows that the Scottish Government has NEVER been denied a request for information from Westminster when it comes to the GERS calculations.

Again Murphy hasn't done his homework.

It sends along half-hearted estimates instead. And in the process it makes clear that it is contemptuous of the Scottish Parliament managing the Scottish economy, which is clearly not possible without data.

Westminster doesn't send along the estimates, this is really basic stuff and just shows that Murphy does not understand this subject matter. They are calculated and produced by the Scottish Government.

To be blunt, Westminster is saying as loudly and clearly as it can that Scotland quite literally does not count by refusing to measure what happens there. 

Westminster does it own data along with regional statistics within the UK, they just aren't very good. Which is why the Scottish Government does a bang up job of calculating them often directly from the source data used by all government departments (such as income tax).

So what can be done about this? I suggest three things. First, all with concern for Scotland need to demand proper data on its economy.

Scotland has proper data, which anyone remotely interested in the topic can tell you. If it wanted more “proper data” of a higher degree of confidence there is nothing stopping the Scottish Government getting this. 

We can only assume that they are confident in that data otherwise they would have invested more time and effort in getting it right. 

Given the huge review of GERS that the SNP undertook when they came to power and signed off by the Cuthberts the question as to what more the government can do to get this data to a higher degree of confidence would be enlightening. Sadly we have not had one here. 

That can start now. Secondly, it means that GERS has to be treated properly, with deep suspicion.

Murphy would have some credibility if he could show why we should treat the data with  deep suspicion if say for example he had shown why it low balls Scottish income tax, or VAT or Corporation tax, but he hasn’t. Most likely this is because he cant find a credible critique on a subject he is highly ill-informed on.

The chance that Scotland makes a deficit of the scale it suggests is remote. It is exceptionally unlikely that eight per cent of the population make 17 per cent of the UK deficit.

Why? This FACT has just been stated with no backing whatsoever? 

It’s credible that this is the case given that we have 8.5% of the population on around 33% of the landmass of the UK. Sparcity costs money in terms of public services as we all know and I’ve set out the reasons for that in this blog several times over. If Richard had done any kind of research he would know that such a statement is ridiculous.

Thirdly, move the debate on. Discuss what Scotland can do.

Great, at last let’s talk about what Scotland can do. Finally we can get a debate about all the things Scotland would do differently to make us better off after independence.

Put oil firmly in context, adding hydro, tidal and other energy into the mix at the same time. Talk about what Scotland could invest in if independent. Make clear that it would be England that would owe Scotland money if there was independence: that’s the real legacy of oil.

Why would England owe Scotland money? That can only be based on starting the world in 1980 and taking the GERS and SNAP data supplied by the Scottish Government which Murphy has just spent the vast majority of the article telling us is wrong!  The data is either reliable for conclusions or it is not?

Having answered that one perhaps Murphy can answer why the world only starts in 1980 and not 1888 with the Goschen formula (again see this blog).

Talk about how Scotland could draw in new business, from England where many want to live in a Europe-friendly country, and from around the world where an English speaking base near Europe is desperately attractive. 

So business is going to relocate from England to a “pro-Europe country” so pro-Europe that when it joins it wants all of the opt-outs of the UK and then some more (such as CFP), indeed it wants so many opt-outs that the SNP are now switching their support to EFTA from the EU. Again a familiarity with Scottish politics would have helped before putting finger to keyboard.

Tackle the big questions early, such as currency, tax and how social justice will be delivered by an equitable and well-funded tax system that ensures all cheats pay.

How about a free floating Scots Pound (the only credible option) which will mean that the costs of servicing mortgages and rents will go up or be volatile or most likely be both. How does that help social justice. Let’s also not forget that the SNP wont even increase the 45p rate for fear of capital flight, I guess tightening tax rules will really encourage that capital to stay. Frankly this is just abysmal.

This is where the economic debate needs to be, and it could be if GERS and all the nonsense that goes with it is dismissed as another example of Westminster’s contemptible attitude to all things Scottish, which is precisely what it looks like to me. Make the economic narrative Scottish in other words, which is precisely what GERS is not. That’s made in England.

The conclusion is laughable, Scottish data provided by the Scottish Government run by the SNP is made in England - yes he did end on that! 

The economic debate does not “need to be” this ill informed, empty and vacuous rantings from an “academic” who clearly does not understand the topic. Nor can he provide one, just one, example of where he believes the GERS confidence intervals to be wrong. That says nearly everything we need to know about this article. It’s just an attempt to provide those who desperately want to have some comeback to the fact that their economic case for independence lies in tatters. 

Sadly anyone citing his article has just shown themselves up as someone who either does not understand or is just so desperate for an answer that they will throw their lot in with a man so thoroughly embarrassed by his naivety on the subject that he is prepared to demonstrate his ignorance in the National.

Polling update : The dog that didn't bark.. yet

It's always tempting to update the polling trend numbers I analyse as soon as a new poll comes out. I'm glad I didn't do that, else I would be firing our a blog about twice a week on the topic continually updating the narrative as the latest numbers shifted. 

I'm a great fan of slow journalism (if you don't subscribe you really should) it's a wonderful publication that explains the benefits of writing news stories and opinion pieces well after the event rather than in the heat of the moment. In politics, business and life the 24 hour news cycle often doesn't help and can often mean you attribute far too much importance to the latest change in the story rather than the story itself. 

With the announcements of last week were designed to change the narrative for the SNP. This was their big play, this was the attempt to paint the Tories into the corner to "block the will of the people". From my active days on twitter I know many nationalists who were salivating at the prospect of this block by Westminister. The "block" would be the moment when the people of Scotland would finally see the light and turn to the nationalist cause. 

The trouble is it hasn't worked out like that. Taking all the polls for the month of March (so far) where are we? 




Bang on trend again, with the apparent correlation (not to be confused with causation) between time and support for independence looking stronger. The further we get away from the referendum the less people tend to support independence. 




I've also started to look at the data from a poly trend basis. I do this to improve the line of best fit but also to tease out if there are deeper trends going on in the data. Here too it looks like we are bang on trend with a tiny but almost unnoticeable improvement in the nationalist cause since Brexit. It's clear after the shock of Brexit there were a number of No voters who temporarily contemplated switching sides, early in the morning of the Brexit vote I confess I was one of them. But that feeling has clearly subsided for many (again including me). 

The nationalists were clearly banking on a similar Yes bounce after the Westminster block. So far though there seems to be no sign of it and the long term trend remains intact. 



Even looking at the PanelBase only polls (which have a lower level of Don't Knows than the rest of the pollsters and tend to have a slight systematic bias towards Yes, please note that doesn't make them wrong) we can see the downward trend of the Yes movement since the EU referendum - thanks to Fraser Whyte for pointing that out. 

The "Westminster block" narrative was the SNP's "big dog", the trump card in their deck. But it looks like (so far) this particular dog hasn't barked. 

Again looking at the data over the long term rather than obsessing about the latest narrative we just have a relentless trend which is not in the SNP's favour. No wonder they are talking about "before it's too late" it looks like time is running away from them. 




 

Hard questions over hard indy.

I've written previously about the mess the SNP are going to get themselves into when it comes to explaining why it's bad to lose trade with the EU but not with the UK, we're only just starting to see the reality of that mess and it came in a car crash interview with SNP MP Eilidh Whiteford on Channel 4 news. 

You can watch the entire car crash here, but I thought it was so enlightening I transcribed the entire interview because it's even more remarkable when written down. 

A few points to note. There are of course lots of "ums and ehs" in a down the line interview but the number of "you knows" here is quite remarkable, perhaps that's a consequence of an SNP MP only speaking to like minded individuals - or maybe it's just a stress coping strategy. 

However the key point is Krishnan Grur Murthy saying "Sounds like you don't have an answer".

They don't have an answer because all the remain EU rhetoric is not coming back to bite the SNP in ways they just don't understand. 

That's the problem with using any excuse to further the cause of nationalism, over time you just end up tying yourself in knots as your own past arguments come back to haunt you.  

BEGINS

KG-M : Nicola Sturgeon says there must be an election before it’s too late. How could it ever be too late?

EW : Em I … I think, you know, if you look back to the proposals that the SG put forward just a few months ago. You know there was a lot of compromise in that and an acceptance that we would leave the EU with the rest of the UK. The key thing is protecting Scotland’s place in the single market, that’s the priority. 

KG-M : Yes I understand that but you are not pretending are you that there won’t be a period that Scotland goes out (of the EU) before it goes back in?

EW : I don’t know. Ehhh, you know, that’s up for negotiation I don’t think that any of have

KG-M : But how would it work?

EW : a crystal ball and predict what would happen

KG-M : Just explain how you think you could avoid leaving?

EW: Well I certainly would like us to be able to …. you know ehh have that negotiation on the basis of a democratic mandate? People in Scotland voted to stay in the EU by quite an overwhelming majority, you know it wasn’t a close vote, like it was in the rest of the UK. 

KG-M : Let’s talk about your trading partners then, is Gordon Brown right to point out today that around 65% of Scotland is with the rest of the United Kingdom?

EW: Yeah I think he is and obviously, you know, we want to continue to work with our neighbours in other parts of the UK. You know, we’ve heard Gordon Brown’s promises before umm

KG-M : if 65% of (glances at camera) Scotland’s trade is with the rest of the United Kingdom, what would be the impact of going to WTO rules and tariffs for all that trade on the Scottish economy. 

EW: I think that the issue here about trade is; it shouldn’t be an either or. The UK government said very clearly to Ireland that they shouldn’t have to choose between their trade with the UK and their trade with the EU. They’re saying that it’s not one or the other. Now if they can say that to Ireland, they can say the same for Scotland and actually this contradictory position just erodes trust on both fronts. 

KG-M : Your proposition though is that Scotland should be part of the European Union. And you are predicting that Theresa May will fail to do a good deal for the United Kingdom with the European Union. That means reverting to WTO rules between the United Kingdom and the European Union. You want to be part of the European Union but I’m asking you what would be the impact on Scotland’s economy of WTO rules between the European Union, which you would be part of, and the rest of the United Kingdom. 

EW: Well, I think it would be very difficult for us to revert to WTO rules

KG-M: (Interrupting) it would be terrible wouldn’t it. 

EW: I think that would be very damaging. 

KG-M: So why are you proposing it?

EW: But, you know, the key thing, the key thing Krishnan is and, you know, and this is the compromise that Nicola Sturgeon has pushed consistently, is, you know, we’ve argued strongly for the whole of the UK to be part of the single market,  as we leave the EU to keep that, keep that relationship with our neighbours, because it’s important for our livelihoods, for our jobs…

KG-M: But you’ve lost that one. Why do you support a relationship that involved 15% of your trade to one that involved 65% of your trade?

EW: But it’s not, it’s not, that’s such a false choice and we need to, you know, just be really clear about this?

 KG-M: Why’s it a false choice?

EW: We’re not choosing between, well because we’ll still have trade between the rest of the UK cause because that’d be in the UK’s interest to maintain that.

KG-M: Yes but under WTO rules, yeah you’d be paying tariffs on it. That’s the point. That would have a terrible impact on the Scottish Economy. 

EW: (Visibly swallows) Well Krishnan we are very keen to ensure that we’re able to continue to trade with our neighbours, whether those are our neighbours south of the border, whether they are our neighbours in the European Union. 

KG-M: Are you pretending that you can be part of Europe and yet have free trade with whats left of the United Kingdom? Irrespective of what the deal is with the United Kingdom. What that Scotland could have some special status within Europe. 

EW: I think it’s really important that we don’t get ahead of ourselves in this debate because we’re not going to

KG-M: Sounds like you don’t have an answer. 

EW: we’re anybody. No, well it’s not that we don’t have an answer. It’s that we, we’ve put forward credible proposals to keep ourselves, to keep the UK and failing that to keep Scotland in the EU and we’ve not even had the courtesy of a response to that. So, you know, people in Scotland rightly want to hold on to some of the privileges that we currently have eh within the single market and, you know, we’re going to continue to negotiate with our neighbours, all of our neighbours to make sure that, that’s possible to protect Scotland’s interests as best we can. 

ENDS